Lithium prices are projected to stabilize in 2025 following a two-year downturn, as the global oversupply diminishes due to the closure of several mines and increased electric vehicle (EV) sales in China. While this recovery could be capped by the potential reopening of mines, analysts and traders are optimistic that strong demand will outpace supply in the coming year.
Prices of lithium, a key component in EV batteries, have dropped by nearly 86% from their peak in November 2022. This dramatic decline forced companies worldwide to close mines. However, market participants are hopeful that demand will surpass supply in 2025 as China intensifies policy measures aimed at boosting sales in the world’s largest EV market.
According to Antaike, a state-owned Chinese commodity data provider, the global lithium supply glut is expected to shrink by half in 2025, falling to approximately 80,000 tons equivalent of lithium carbonate (LCE) from nearly 150,000 tons last year.
Cameron Hughes, a battery markets analyst at CRU Group, noted, “We expect to see a price recovery for lithium in 2025 as mine closures and the possibility of further curtailments will significantly reduce the market surplus.” He highlighted the impact of global mine closures but did not disclose further specifics.
In July, China doubled its subsidies for electric vehicles, with over 5 million vehicles benefiting from the incentives by mid-December. This policy boost sparked a lithium price rally late last year, and analysts predict that these subsidies will continue to support lithium prices through 2025.
One buyer at a mid-sized cathode material plant in China, who wished to remain anonymous due to company policies, attributed the uptick in lithium trade in the fourth quarter of 2024 directly to the government’s subsidies. “The uptick in lithium trade business in the fourth quarter of 2024 can be undeniably attributed to the policy of providing subsidies,” the buyer said.
David Merriman, research director at Project Blue, a metals research firm, forecasted that any price recovery would likely materialize towards the end of 2025, as inventories are consumed and buyers return to the spot market. Project Blue anticipates that prices will stabilize at an average of $11,092 per metric ton in 2025, while Chinese broker Guotai Juan predicts a range of 60,000 yuan ($8,184) to 90,000 yuan ($12,276).
Last year, the most-traded lithium contract on the Guangzhou Futures Exchange fluctuated between 68,250 yuan and 125,000 yuan per ton.
Despite the optimistic forecast, analysts cautioned that significant price increases in the near term may be limited. Many closed mines could quickly ramp up production if it becomes profitable, which may keep prices from soaring. Additionally, potential U.S. policy changes, such as the reintroduction of tariffs on Chinese EV battery imports or reductions in domestic EV incentives, could dampen lithium demand, according to Merriman.
As the lithium market navigates these complex dynamics, industry experts remain cautious but hopeful that 2025 will bring a much-needed stabilization after the volatility of the past two years.
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